Four Ways to Kick Start Your Savings
Four Ways to Kick Start Your Savings
Creating or building your savings can feel daunting if you’re starting from scratch, but starting small and slowly saving up over time is easier than you may think! If you have not yet started, don’t know how to start, or need some tips to better manage your current plan, we are here to get you in motion. Saving and budgeting can be intimidating, but with the right tools, tips and information, you can begin the process with these small and effective ideas.
Create a Plan – Start small, especially if you are looking to simply establish initial savings. Decide on what your short- or long-term goals are. For example, if you want to save up to buy a new car or take a vacation, you will set your savings goal amount and then create a savings plan to achieve that amount. When creating the plan make sure to list how and where you will be allocating this money. Whether you’re saving loose change, setting aside a certain amount each month, or rounding up to add the change using a financial app, do what works best for you. It’s likely you won’t even notice these small amounts, but they will add up!
If your plan is budgeting, you will start by making a list of all your expenses and subtracting that total from your monthly income. Evaluate how much is left after expenses for additional items like entertainment, eating out or other things you may like to splurge on. Also take a look at your current expenses to find ways to reduce or remove them all together. There are many ways to begin, but the most important thing is to start and take action now.
Reduce Debt – Another way to save is to work towards reducing debt, which will in turn free up money you can put towards your savings. Making a list of all your current debts and respective interest rates is important. You may want to strategize your plan of attack to reduce these debts. A key tip is to always pay more than the minimum amount on any account.
Two popular methods in reducing debt are the avalanche and snowball methods. The avalanche method is targeted towards paying off your account with the highest interest rate first, while still continuing to pay the minimum on any other accounts you have. This will help you pay off the account to reduce the largest interest rates, and once this is done you can focus on tackling the next highest interest rate account. With the snowball method, you begin by addressing the account with the lowest balance and pay this account off completely, while still paying the minimum on all other accounts. Once that smallest balance is paid off, move on the next smallest balance until all debt is paid off.
Save for the Unexpected – We can’t always control what may happen in the future, but we do have control over the present, which includes the ability to save up for the unexpected. Having an emergency fund is extremely important. Identify your needs versus wants, eliminate unnecessary expenses and adopt budget savings hacks to increase your emergency savings fund. Create a monthly list of expenses that are essential and those that are not. For example, you need to pay your electricity bill every month, but do you really need that gym membership that you don’t use as often? Things like monthly subscriptions to magazines, clubs, associations, TV subscriptions, etc. are wants not needs. This is not to say you shouldn’t have them, but instead think if these items are the best options to be paying right now. Eliminating even one or two of the wants that you don’t truly need can help free up funds to put towards your overall savings.
Future Investments – If your goal is to invest for your future, there are various ways to begin researching the best financial plan to meet your needs. If your employer offers a match to your retirement plan contribution, it is always best to take advantage of the employer match and contribute the maximum amount possible. IRAs are a great additional tool to continue saving for retirement. By using traditional or Roth IRA options, you can expand your savings, giving you an added cushion when retirement comes. The important thing is to start saving today even if it’s a little bit. When it comes to retirement, compounding interest is on your side and could end up yielding you significantly more money over the course of a lifetime. With so many different avenues to expand your finances, it can be tough to keep up with all your options. A financial advisor could be beneficial for long-term financial success. SDCCU Investment Services is a good place to start and can provide a complimentary review of your portfolio. Learn more and make an appointment with them today.
These simple but effective ideas will help guide you on your savings journey, and now it’s your turn to take action. Talk to your friends and family about which methods they use. No matter how you decide to begin your savings plan, we hope you join in on “America Saves Week” and grow your savings to your full potential.
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